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The AUD continues to trade lower following the Chinese ban of Australian coal to its Dalian port. The ASX has benefited for the weaker exchange rate as it is trading at its highest level since October.
Trump yesterday tweeted about not inhibiting technology from coming to the US with specific references to 5G networks implemented by the Chinese firm Huawei. This suggests a softer stance towards the Chinese firm which recently saw governments stating they would no longer allow the company to be involved with their infrastructure upgrades.
Brexit woes have continued as more conservative members have warned they may rebel against the party in order to stop a no-deal Brexit. Amendments for Wednesday the 27th include a vote on preventing a no-deal Brexit and a vote to delay the deadline at the end of March.
The Dow fell 100 points yesterday on the back of poor economic data. USD durable goods orders missed forecasts by 0.5% whilst existing homes sales fell by 1.2% when they were expected to rise 0.2%
The FTSE followed suit with a loss of 0.85% over the main session. UK Net public sector borrowing was up over 4.5 billion.
Brent and WTI oil both softened yesterday on US data. US inventories rose to over 450 million barrels and production has reached 12 million barrels per day, the highest production rate any country has ever achieved.
Cotton is trading 3.7% higher following trade talk discussions with the US that stated they have committed to buying $30 billion of US agricultural goods.
Kraft Heinz has fallen over 20% as they have disclosed they are cutting their dividend and announcing they have been served a subpoena by the SEC in relation to their procurement accounting policies.
The search engine Baidu gained over 4% yesterday as they beat earnings estimates by 18c per share
Asian overnight: A mixed affair in Asia saw Chinese and Australian gains despite losses throughout Japan and Hong Kong. The US-China trade war remains the hot topic, with Donald Trump now scheduled to meet with the top Chinese negotiator, Liu He. Fears over the rejection of Australian coal in China has not been allayed, with coal miners understandably losing ground over the course of the session.
UK, US and Europe: Looking ahead, the focus remains on the eurozone, with the and final CPI and German Ifo business climate figures expected to bring euro volatility. Meanwhile, the afternoon sees Canadian retail sales followed by appearances from a host of Fed members. Crude traders will be keen to watch for the Baker Hughes rig count figure too
South Africa: After a soft close for US markets overnight, Index futures out of the region are starting to rebound this morning as are Chinese equity markets. US China trade talks continue today, while the UK is expected to ask the EU for an extension on the Brexit deadline. It is an otherwise light calendar, in terms of scheduled economic data. The dollar has softened slightly to aid gains in commodity prices. The rand has managed to claw back further strength and trade back below the R14/$ mark. Tencent Holdings is down 0.6% in Asia, suggestive of a similar start for major holding company Naspers. BHP Group is 0.4% lower in Australia suggestive of a flat to lower start for local miners.
Economic calendar - key events and forecast (times in GMT)
Source: Daily FX Economic Calendar
9am – German IFO index (February): business climate index to fall to 98.5 from 99.1. Markets to watch: EUR crosses 10am – eurozone CPI (January, final): CPI to fall to 1.4% from 1.6% YoY. Markets to watch: EUR crosses
5:30pm ECB President Draghi Speaks (EU)Market to watch EUR Crosses
Corporate News, Upgrades and Downgrades
Centrica has renewed a series of debt facilities worth a combined £4.2 billion with 21 banks. The new debt will mature in February 2024.
Pearson reported a 46% rise in annual profit for 2018, to £590 million, although adjusted operating profit was down 5% to £546 million. The dividend was raised by 8% to 13p per share.
Merlin Entertainments has sold its Australian ski resorts to Vail Resorts for £95 million.
Dairy Crest has agreed to a takeover by Canada’s Saputo Inc for £975 million, or 620p in cash for each Dairy Crest share.
Codemasters upgraded to buy at Berenberg
DKSH raised to neutral at Credit Suisse
DNB upgraded to overweight at Morgan Stanley
Leroy upgraded to buy at Fearnley
Centrica downgraded to neutral at Goldman
KAZ Minerals downgraded to sell at VTB Capital
Nordea cut to equal-weight at Morgan Stanley
Retail Estates cut to hold at Kepler Cheuvreux
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Information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Another shutdown of the US government has reportedly been avoided in the latest round of negotiations. Following the longest shutdown in the history of the US at the start of this year, the government was opened temporarily whilst budget negotiations continue.
US markets had a mixed session yesterday with the Dow down 0.21% but the S&P and Nasdaq marginally higher at 0.13% and 0.07% gains respectively. Could the end of shutdown fears spur a rally in today’s session?
With a subdued session in most of yesterdays major markets, the Nikkei was the stand out from the crowd with a gain of 2.61%. The gain saw the index rebound from its monthly low on the back of strong demand for automakers and machinery makers as well as a weaker yen.
UK economic growth over the last 3 months was the weakest since 2012 which is thought to be attributed to global and Brexit worries. Meanwhile, a study has claimed British companies have diverted £8 billion to the EU amid the uncertainty.
Brent and WTI were up 0.37% and 0.29% respectively. El Molla, the Egyptian petroleum minister has said that he believes $60-70 is a fair price for a barrel of oil.
Gold has firmed slightly following a pull back of the US dollar amid ongoing US-China trade talks
London Cocoa was up over 2% yesterday but there are concerns that this may be short lived as it tests its resistance level seen over the past 6 months.
Iron Ore has retreated from its 2 year high following a 20% in the past week.
Ocado has begun to claw back some of their lost market cap following last weeks warehouse fire. The food delivery company is now trading at the price it was 2 weeks ago.
Plus 500 shares have fallen over 30% following the announcement that they expect to miss earnings expectations which they attribute mainly to tightening regulations by the EU.
Asian overnight: Japanese markets were playing catch up overnight following Monday’s bank holiday, with both the Nikkei and Topix rising 2% over the course of the session. Sentiment is likely to be guided by any developments in trade talks between the US and China, yet at least we are seeing tentative signs of a possible breakthrough in negotiations to avoid another government shutdown. This has helped the dollar to rise to the highest level since December yesterday. However, while a deal appears to have been reached, it is still down to President Trump to approve that deal.
Sentiment is likely to be guided by any developments in trade talks between the US and China...
UK, US and Europe: In the latest of Brexit woes, a ferry contract has been cancelled with the company Seaborne Freight. The deal received criticism as the company owned no ships and had never ran a ferry service before. A fund of £102 million was used to reduce congestion on the Dover port in the case of a no-deal Brexit. The government asserted that the procurement process which involved companies submitting bids for the funds was done competitively and that the Department of Transport acted transparently.
Looking ahead, central bankers are in focus, with appearances from Jens Weidmann, Mark Carney, and Jerome Powell will dominate sentiment. Coming at a time where global growth is slowing and inflation is also on the slide, markets will be watching intently for any more dovish signals from these prominent central bankers.
South Africa: Markets have found some solace in news that the US policymakers had reached a tentative deal which looks to avert the commencement of another government shutdown later this week. Markets will now look to the next bout of trade talks this week ahead of the March 1 deadline (before US raises import tariffs again) for resolve on the matter. Our local bourse is trading firmer on the improved global market sentiment although the rand remains weakened as the dollar remains firm. Industrial rand hedge counters have been the play (in the short term) leading our local bourse higher while, financial and retail counters have proven to be more vulnerable to rand weakening. Metal prices trade mixed this morning with precious metals slightly higher and most base metals slightly lower.
Economic calendar - key events and forecast (times in GMT)
Source: Daily FX Economic Calendar
11.30pm – Westpac Australia consumer confidence (February): index to fall to 99.2 from 99.6. Markets to watch: AUD crosses
Corporate News, Upgrades and Downgrades
Nissan's net income for the last quarter fell 76%
TUI suffered a fiscal Q1 loss of €83.6 million for underlying earnings, compared to a €36.7 million loss a year earlier. Weather conditions and a weaker pound hit margins.
AA said that its motor insurance business saw strong growth for the full year, with policies up 16% to 731,000, but roadside breakdown members fell 2% to 3.21 million. Capital expenditure and full-year earnings are expected to be in line with guidance.
Stagecoach has agreed a new short-term rail franchise with the UK Department for Transport, running from 3 March until 18 August.
Debenhams has secured financing of £40 million as it looks to renegotiate debts with lenders and accelerate plans for store closures in the latest of British high street stores to face difficulties.
Softbank have invested $940 million in Nuro a self-driving delivery service.
Galp upgraded to neutral at Goldman
Leoni upgraded to buy at Quirin Privatbank AG
Polymetal upgraded to neutral at JPMorgan
Rio Tinto upgraded to buy at Goldman
BHP Group downgraded to neutral at Goldman
Britvic cut to equal-weight at Morgan Stanley
Spire Healthcare downgraded to underperform at Credit Suisse
Fiat Chrysler downgraded to add at AlphaValue
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Information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

MP’s have voted to remove the Irish backstop and remove the possibility of a No-Deal Brexit in the latest round of Commons voting.
Venezuela’s Maduro is reported to have said he is ready to talk to the opposition. This could hopefully stop the escalation of unrest in Venezuela which yesterday saw defectors calling on the Trump administration to arm them against Maduro, labelling him a dictator.
The FTSE gained 1.75% yesterday whilst the Dow gained 0.8%
Meanwhile the Hang Seng was up 0.97% yesterday but as at the time of writing it has shown a retracement of those gains. A similar pattern is shown by the Nikkei with yesterday’s gain at 0.83%
Gold is continuing to trade at its 8-month high with a 0.89% gain so far this week. Part of this gain is attributed to the expected US Fed announcement to pause rate changes. The announcement is tonight 7pm GMT.
Oil edged higher yesterday after the US announced sanctions on Venezuelan oil firms on Monday however it remains relatively flat overall due to wider concerns of slowing global growth.
Apple earnings marginally beat expectations with $4.18 EPS compared to $4.17 expected. Their share price gained over 4.5% as a result.
Pfizer also beat earnings by 1 cent with expectations being 63c per share compared to 64 achieved. Whilst also making a loss in their 4th quarter their shares gained almost 6% as their CEO stated their products in development are the best in their history.
Asian overnight: Asian markets have experienced a largely downbeat session, as minimal gains in Australia and the Hang Seng did little to make up for wider losses throughout China and Japan. This tells us a lot about the tone and expectations for the US-China trade talks which get underway later today. The tragic dam accident in Brazil has driven iron ore prices higher overnight, as markets attempt to quantify the impact on supply. This spike helped boost the mining sector, driving the ASX 200 into the green. Meanwhile, the pound has been gaining ground in the wake of yesterday’s Parliamentary votes, with two amendments managing to garner enough votes to gain approval. However, while Parliament voted to avoid a no-deal Brexit and possibly seek an alternative to the backstop, it is unlikely that Theresa May is going to get any concessions when she returns to EU (as happenend after her last humiliating defeat in parliament).
MP's have agreed they want to remove the backstop agreement...
UK, US and Europe: Today looks set to be a busy one, with the mainstay of hard-hitting economic data points coming out of the US in the afternoon. German CPI is speculated to bring a sharp decline in inflation for Europe’s largest economy. However, all eyes will be on the likes of the ADP payrolls figure, alongside the first FOMC meeting of 2019. Given the recent slowdown, all eyes will be on Powell to see quite exactly how dovish a shift we are going to see as we shift more onto a data-dependent policy for rates. Also keep an eye out for US crude inventories, with a second build expected after last week’s sharp rise. On the corporate front, earnings releases from the likes of Facebook, Microsoft, Visa, Boeing, and McDonald’s should ensure that sentiment is at least in part driven by individual equities.
Following a largely negative night of voting on amendments to the Brexit deal, one of the few things MP’s have agreed on in that they want to replace the backstop arrangement. The amendment was passed with 317 to 301 votes, other votes came close to passing but ultimately failed to gain a majority in the House of Commons. MP’s also voted to reject the possibility of a no deal Brexit (although non-binding) which passed with a majority of 8 votes. As a result, Jeremy Corbyn has said he will begin discussions with Theresa May which were originally delayed until the possibility of ‘no deal’ was removed.
South Africa: After UK parliament has rejected the proposed Brexit deal presented by Theresa may, the British Prime Minister will now go back to the European Union to renegotiate a deal. Parliament has however backed amendments to avoid a no-deal Brexit scenario. The Nasdaq is leading the US market higher this morning after Apple reported better than expected results after the bell last night. Today will see the resumption of talks between the US and China regarding trade. Metal prices are trading mostly higher this morning as is Brent crude following US imposed sanctions on a major oil producer in Venezuela. The rand remains firm as the dollar remains weak ahead of this evenings US rates meeting. Tencent Holdings is down 0.3% in Asia suggestive of a slightly lower start for major holding company Naspers. BHP Group is trading 2.5% higher in Australia suggestive of a positive start for local resource counters.
Economic calendar - key events and forecast (times in GMT)
Source: Daily FX Economic Calendar
10am – eurozone business confidence (January): previous reading 0.82. Market to watch: EUR crosses 1pm – German CPI (January, preliminary): previous reading saw a rise of 1.7%. Market to watch: EUR crosses 1.15pm – US ADP employment report (January): 175K jobs expected to have been created, from 271K a month earlier. Markets to watch: US indices, USD crosses 3pm – US pending home sales (December): expected to fall by 8% YoY. Market to watch: USD crosses 3.30pm – US EIA crude inventories (w/e 25 January): previous reading saw a rise of 8 million barrels. Markets to watch: Brent, WTI 7pm – FOMC meeting: no change in rates expected, but watch for any comments on the current situation and policy path. Markets to watch: US indices, USD crosses
Corporate News, Upgrades and Downgrades
Wizz Air saw an 87% drop in Q3 net profit, to €1.7 million, despite a 21% rise in revenue from higher passenger volumes. Fuel costs weighed on performance, but the firm kept full-year profit guidance unchanged at €270-300 million.
3i said that it remained on track to meet full-year guidance, thanks to a good level of income in Q3.
Gamestop shares fell 22% as they cancelled the sale of the company.
Medco have agreed to buy Ophir Energy for 55p per share in a cash deal
Shoprite shares fell over 10% following a profit warning
Fraport upgraded to buy at HSBC
Gjensidige upgraded to outperform at KBW
Siemens Healthineers upgraded to buy at DZ Bank
Uniper upgraded to neutral at JPMorgan
CVS Group downgraded to sector perform at RBC
Suez downgraded to underweight at Morgan Stanley
Tryg downgraded to underperform at KBW
Voestalpine downgraded to hold at Baader Helvea
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Information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Chinese growth has officially fallen to its slowest in 28 years. Fourth quarter figures have been announced which confirm analysts’ expectations that growth would be 6.4%, averaging 6.6% for the year.
The US shutdown has now entered its 30th day. Trump offered protections for ‘Dreamers’ in an attempt to negotiate but this was quickly rejected by democrats as inadequate. Analysts now believe the shutdown will cause a 0.25% reduction in growth figures for the first quarter of 2019.
Jeremy Corbyn has repeated calls for Theresa May to rule out a no deal Brexit. The PM is due in parliament today to outline her plans following last week’s defeats
Rightmove have published data for British property asking prices, they have had their weakest start since 2012 due to lack of demand as a result of Brexit uncertainty
Markets made strong gains over the weekend with the FTSE gaining 1.95% and the Dow gaining 1.38%.
Asian markets followed suit with the Hang Seng also gaining over 1% and the Nikkei up over 2%
High demand from China for Oil has pushed prices to 2019 highs despite the news of their economic slowdown.
Sugar prices have gained 1% in response to the gains in Oil. Sugar cane can be used to produce ethanol biofuel so higher oil prices increases demand for cane.
South Africa: Global equity markets are trading mixed this morning with US index futures around 0.3% lower, while Asian markets trade roughly 0.3% higher. Chinese GDP data showed slightly slower economic growth than in the previous quarter, although industrial production and retail sales data came in better than expected. Theresa May will again appear in U.K. parliament to try progress the Brexit deal with the country's policy makers. Precious metal prices trade modestly higher this morning, while crude oil has extended last weeks gains, with Brent now trading above the $62.50/barrel mark. Tencent Holdings is up 0.89% suggestive of a positive start for major holding company Naspers. BHP Billiton is trading 0.3% higher in Australia, suggestive of a slightly positive start for local resource counters.
Economic calendar - key events and forecast (times in GMT)
Source: Daily FX Economic Calendar
Corporate News, Upgrades and Downgrades
Mike Ashley, owner of Sports Direct and recent acquirer of House of Fraser is now in talks to buy HMV
The account scandal for Patisserie Valerie has continued with the investigation finding thousands of false entries in their ledgers
Rolls Royce are in talk to supply a nuclear plant in Essex. Concerns over the future of UK nuclear power have arisen following the announcement by Hitachi last week to suspend work on a plant in Anglesey
William Hill has adjusted profit guidance down by 15%
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Information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Netflix announced subscriber growth of 8.8 million over the past year giving them a total of more than 139 million. Meanwhile, their quarterly revenue was up 27% from the same period in 2017 but the share price is down 3% as they failed to hit analysts’ expectations.
Theresa May has rejected calls of Jeremy Corbyn to rule out a no deal Brexit whilst the FTSE yesterday stayed flat.
American Indices were up yesterday with the Dow gaining 0.67% despite no resolution to the US government shutdown yet being found. The US delegation’s trip to the World Economic Forum has been cancelled as a result.
Fidelity Investments stated yesterday that Chinese stocks are “very very attractive”. Asian markets were up yesterday with both the Hang Seng and the Nikkei gaining 1.29%.
Brent futures are up 1.19% and WTI futures are up 1.33% this comes as the market for heavy oil such as Heavy Louisiana Sweet is seeing tight supply.
Palladium is continuing to trade at its all time high as this month has saw a 11% surge in the precious metal on supply concerns. Meanwhile, Gold has remained steady at around $1290
Morgan Stanley shares are down over 4% following their release yesterday of 80 cents per share compared to 89 cents EPS expected
Afterpay Touch group are up almost 13% after their H1 sales surged.
UK, US and Europe: Markets have eased on promising signs of trade war progress. A report has stated that the US is considering easing Chinese tariffs during their recent negotiations. Germany have also pledged to deepen financial cooperation with China in areas of banking, finance and capital markets. However Germany have also reported that they are considering banning Huawei products, the latest large country to make such a suggestion over security concerns.
South Africa: Global equity market have resumed short term gains as markets find renewed optimism around the progression of trade between China and the US. Oil prices have added more than 1% today following reports that OPEC production had fallen sharply in December 2018. Metal prices are trading relatively flat on the day, while the rand has held onto, although not really extended, its short term strength against the majors. Tencent Holdings is up 1.63% in Asia suggestive of a positive start for major holding company Naspers. BHP Billiton is up 0.73% in Australia suggestive of a positive start for local resource counters.
Economic calendar - key events and forecast (times in GMT)
Source: Daily FX Economic Calendar
Corporate News, Upgrades and Downgrades
Ryanair have reduced profit guidance by 100 million.
JP Morgan have downgraded EasyJet to Neutral
Phillips are to close their UK factory in 2020 resulting in a loss of 400 jobs
Lloyds have secured their Berlin Banking Licence as part of their preparation for Brexit
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Information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Today is considered ‘Super Thursday’ as a number of large UK retailers are set to release their Christmas sales data. This comes after a report from the British Retail Consortium which said that average retail sales saw 0% year on year growth
Jeremy Corbyn is expected to launch an election bid if May loses the Brexit vote, scheduled for Tuesday the 15th. Yesterday saw May suffer another defeat in the house of commons which will mean she will have just 3 days to come up with a plan B if her current deal fails Tuesdays vote.
‘Modest progress’ is said to have been made in the US-China trade talks. The three-day talks have now ended with America announcing that China have pledged to buy a substantial amount of goods and services from the US. Could this see an end to investor fears over the trade war?
Euro pairs are in the spotlight today as Italy are set to release economic data including industrial production. Current estimates are for 0.4% growth but recent announcements from Italy have failed to meet expectations
Oil continued to make gains yesterday with a strong surge following the US-China announcement, despite an audit revealing that Saudi Arabia’s inventories are 2 billion barrels larger than reported.
Cryptocurrencies have had a large sell off this morning as Bitcoin has lost 5% and Litecoin almost 10% with most of the losses happening in a 30 minute time frame.
Jaguar Land Rover have announced they plan to cut up to 5000 jobs as part of a £2.5 billion savings plan
...the US is at risk of losing its triple A credit rating if the shutdown continues.
Asian overnight: Asian markets have dipped overnight, as both US and China emerged from three-days of trade talks with little more than a desire to continue talking. The Australian ASX 200 was the one outlier, rising marginally despite a strengthening AUD. Yesterday’s FOMC minutes provided yet another hint that the committee is happy to be more patient when it comes to rate hikes, thus allowing them the ability to better judge how higher rates are impacting the economy. Overnight data saw Chinese CPI fall from 2.1% to 1.9%, while PPI tumbled to 0.9% from 2.7%. To an extent this frees up the hand of the PBoC, who will likely reach a more accommodative stance in the wake of recent economic strife.
UK, US and Europe: Looking ahead, central banks remain the focus, with the ECB minutes expected to dominate the European session. Meanwhile, appearances from Fed members Bullard, Powell, and Evans should continue to shed light on the future pathway of US rates.
Meanwhile, Trump walked out of a meeting with Democrats leaders yesterday as negotiations to end the government shutdown broke down. Trump called the meeting “a total waste of time’ as he remains defiant on his demands for funding for a border wall. The government has now been shut down for 19 days. Trump later tweeted that when he said “bye-bye” as Nancy Pelosi said no to allocating funds in the budget for increased border security. Fitch have since said that the US is at risk of losing its triple A credit rating if the shutdown continues.
Economic calendar - key events and forecast (times in GMT)
Source: Daily FX Economic Calendar
12.30pm – ECB meeting minutes: these will provide further insight into the views of the central bank. Market to watch: EUR crosses 3pm – US new home sales (November): forecast to rise 2.9% MoM from a 8.9% drop a month earlier. Having declined steadily throughout 2018, US housing data is a key data point for investors at present. Markets to watch: US indices, USD crosses
Corporate News, Upgrades and Downgrades
Tesco said that like-for-like sales rose 2.2% over Christmas, but Q3 growth was just 0.7% higher. It said that the environment remained challenging but that it was still confident of meeting expectations for the full year.
Marks & Spencer saw an overall fall of 2.2% in same-store sales for the 13 weeks to 29 December, and while online sales were up 14%, clothing was down 2.4% and food was 2.1% lower.
Jupiter Fund Management suffered a drop in assets under management for Q4, down to £42.7 billion from £47.7 billion at the end of Q3.
Debenhams reported a 3.5% drop in like-for-like sales in the six weeks to 5 January, and were down 5.7% in the 18 weeks to the same date. It said it was still on track to meet expectations for the full year, however.
Halfords fell 29% following a profit warning
AB InBev upgraded to buy at Bank Degroof Petercam
BASF upgraded to overweight at JPMorgan
BBA Aviation upgraded to buy at Jefferies
Eutelsat raised to overweight at Morgan Stanley
Air Liquide cut to underweight at JPMorgan
Ted Baker downgraded to neutral at Goldman
Burberry downgraded to hold at Berenberg
Polymetal cut to hold at Renaissance Capital
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Information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

The three main American indices: the Dow, the S&P and the NASDAQ all rose over 4% on boxing day following the Dow’s worst Christmas eve ever.
Asian markets followed the trend with the Nikkei also raising 4%
Oil saw its largest daily gain since 2016 with an 8% rally. Oil related companies in Australia also climbed on the price increase.
The dollar basket rose almost 0.6% in the main session but finished the day with a strong gain of 0.29%
Huawei concerns deepen as the UK Defence Secretary states the firms’ involvement in the UK’s network upgrades should be reviewed. This follows an announcement earlier in the week that Huawei’s hardware is to be removed from UK emergency services.
UK business confidence is at its lowest since the Brexit vote according to a poll by the Institute of Directors which showed a negative outlook by 57% of directors.
US consumer confidence released today could highlight the public perception on the ongoing trade war with China, the Fed rate hike and the Huawei tribulations.
Gold is sitting near its 6 month high as market volatility pushes people towards the safe haven asset.
UK, US and Europe: The Trump administration has assured markets that the head of the Fed, Jerome Powell will not be fired following this month’s rate hike. However, Trump has made it clear that he believes rates are being raised too fast, causing this recent volatility and contributing to the Dow’s worst Christmas eve. Meanwhile, the partial government shutdown has continued with Trump stating it will be sustained until a deal on the border wall is made.
Large end of year FX swap rates: Please be aware that due to year end market factors we are seeing significant moves in the funding rates for most FX pairs. This has been observed across the market, although some pairs are looking to be worse affected than others (most notably if you are short US dollars). These factors include financial institutions balancing their books before the end of the year, putting a strain on certain currencies. Read more...
Economic calendar - key events and forecast (times in GMT)
Source: Daily FX Economic Calendar
Corporate News
Head of Tesla, Elon Musk has announced they are looking at setting up supercharger coverage in Africa in 2020.
Huawei have announced they expect revenue to reach $109 Billion fror 2018, a 21% increase YoY.
Vinci are set to buy a 50.01% stake of London Gatwick for £2.9 Billion
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Information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Markets fall as Fed raised US interest rate from 2.25% to 2.5%
At its lowest the Dow fell over 4% following the announcement (its lowest point in over a year) of which it has now seen a small retracement.
Asian markets we also affected, the Hang Seng was down 1.24% at close whereas the Nikkei lost 2.84%, a 15-month low
The announcement saw the dollar gain almost 0.5% against the dollar basket but as investors have fully digested the statements made by the Fed this now sits at a 0.16% gain.
As can be expected, the inverse was seen from gold which fell 0.8% and has now recovered half of that.
Oil has lost most of the gains made in yesterday amongst demand and over supply fears. This comes as U.S inventories have dropped and OPEC have reduce output by 1.2 million barrels per day
Looking ahead, the Bank of England are set to make their rate announcement today although forecasts expect them to remain at 0.75%. Brexit is currently dominating the UK rate, analysts have stated they would normally expect a raise in current conditions but the BoE have implied they are also mindful of the possibility of a no-deal Brexit.
Forecasts expect the UK rate to remain at 0.75% as Brexit dominates the decision...
Asian overnight: Asian markets have followed their US counterparts lower, coming off the back of the Fed’s decision to raise rates for the fourth time. This drop comes despite the dot plot shifting the expectations to two rate hikes in 2019, rather than three. Japanese indices suffered the most overnight, with the BoJ rate decision also coming into play. Kuroda & co decided to keep rates steady, also pointing out that that is unlikely to change anytime soon given that inflation expectations remain relatively subdued.
UK, US and Europe: Looking ahead, the Bank of England maintains the central bank focus, with the MPC widely expected to keep policy steady. With UK retail sales also due out, it should be a volatile morning for the pound. In the US watch out for the Philly Fed manufacturing survey.
Whilst this rate hike was largely expected by investors, many believed that this rate hike would be the last in this tightening cycle. However, the announcement made by the Chair of the Fed, Jerome Powell was less dovish than expected. Whilst original projections we for three rate increases in 2019, this has now been reduced to two. Powell also reiterated that politics played no role in influencing their decision as Trump has criticised the Fed in the past for subduing the economy by raising rates.
Economic calendar - key events and forecast (times in GMT)
Source: Daily FX Economic Calendar
9.30am – UK retail sales (November): sales to rise 3.4% YoY. Markets to watch: GBP crosses 12pm – BoE rate decision: no change in rates expected. Markets to watch: GBP crosses 11.30pm – Japan CPI (November): prices to rise 1.4% YoY, and core CPI to rise 1%. Markets to watch: JPY crosses
Corporate News, Upgrades and Downgrades
Stagecoach has agreed to sell its North America division for $271 million, as it refocuses on its UK operations.
AstraZeneca said that the US FDA had approved its ovarian cancer treatment. Separately, it said that two trials for chronic kidney disease had met their primary objectives.
Kier reported that less than 40% of shareholders took up the rights issue, although it had managed to raise the £250 million required.
Pinterest are said to be preparing for an IPO as early as April 2019
Ceconomy upgraded to hold at HSBC
Geox upgraded to neutral at Mediobanca SpA
Ashmore downgraded to sell at Citi
Funding Circle Holdings downgraded to sell at Citi
Man Group downgraded to neutral at Citi
Novozymes downgraded to underweight at JPMorgan
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The Dow will open lower today than its open price for the year following weak jobs data and the resulting sell-off of FAANG companies.
US Non-farm payrolls grew by 155,000 on Friday, missing estimates of 198,000 whilst unemployment is near record lows at 3.7%
Chinese markets had a poor start to the week following missed trade estimates for November. The Hang Seng has fallen 1.41%, the Shanghai composite by 0.84% and the Shenzhen composite by 1.15%
The European Court of Justice has ruled this morning that the UK can unilaterally revoke Article 50 and the withdrawal from the EU.
The FTSE lost over 4% last week. This was likely due to reduced confidence that Theresa May's Brexit withdrawal agreement will be agreed on by MP's when they vote on it tomorrow following last week's 5 day debate.
A range of UK data on today's economic calendar including monthly GDP growth and the October trade balance could see the FTSE and GBP crosses have an eventful start to the week
Oil is up almost 4% following an announcement from OPEC that they will cut production by 800,000 barrels per day.
Gold rose 2.16% last week as we continue to see risk aversion increase with investors.
New York Cocoa saw its largest single day jump on Friday, growing 4.36% coming amidst supply worries from the Ivory Coast, the top producer of the commodity. London Cocoa saw a similar jump of 3.57%
Asia overnight: Japan saw a 3Q contraction of GDP by 2.5%, 0.5% more than the expected 2% reduction. However this move did not move the Nikkei significantly compared to the losses it sustained last week which almost hit 6%. The ASX is now at 2 year lows following US-China tensions as the poor trade data for China. Weaker demand from China could see commodities exports fall for Australia.
UK, US and Europe: Whilst tensions between the US and China have risen once again, the usual suspect of a trade war is not to blame this time. Following last week’s arrest on Huawei CFO Meng Wanzhou by Canadian Authorities with the speculated intention of extradition to the U.S, China has demanded her immediate release. They have also stated that the Canadians will face consequences for their “unreasonable” actions. Ms Meng is accused of circumventing US sanctions on Iran via a subsidiary company which had been misrepresented as a separate company to Huawei. The tech giant which recently surpassed Apple to be the second largest smartphone maker in the world (behind Samsung) has seen its fair share of limelight recently. They were banned by both Australia and New Zealand over cyber-security concerns and Japan is expected to follow suit.
Economic calendar - key events and forecast (times in GMT)
Source: Daily FX Economic Calendar
Corporate News, Upgrades and Downgrades
Facebook has increased their stock buyback program to $9 Billion
Nissan's Carlos Ghosn is set to be charged for under-reporting his salary
Softbank has set the price of their telecom IPO at 1500 yen (£10.47). The shares will begin trading on the 19th of December
Interserve shares are down 60% as they are in talks with lenders about converting debt to equity.
Cronos shares were up over 20% on Friday as they announced they are in talks with Altria, the tobacco giant.
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Information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

UK government found in contempt of parliament for the first time due to not releasing the full legal advice regarding Brexit. The government has now agreed that it will be published which may cause more instability in the markets
Markets have retreated following their rally attributed to agreements made between the US and China at the G20. The fall comes amidst increasing sentiment of an economic slowdown as well as reduced faith in trade war negotiations following officials of the Trump administration admitting it was too early to say if a longer-term deal could be reached.
The Dow was down over 2.5% whereas the Hang Seng was down over 1.5%. Meanwhile, the EU volatility index was up over 7% over the course of yesterday.
Australian GDP missed growth QoQ by 0.3% and YoY by 0.5%. The growth targets were 0.6% and 3.3% respectively.
Oil prices have fallen again as the Chinese government has warned of a falling demand due to a slowing down of the economy whilst the US oil inventories have continued to grow according to a report by the American petroleum institute. Official US oil inventories will be released today at 15:30 GMT.
Gold has fallen from its recent 5 week high and the dollar has strengthened. The dollar basket gained 0.4% yesterday.
This market sell off comes as bond yields have dropped, showing a flight from equities into the less risky assets. The current US yield curve and what it means for investors is discussed here.
The contempt vote was another blow to British Prime Minister Theresa May as she battles to gain support for her withdrawal agreement.
Asian overnight: Asian markets fell sharply after a dismal day for US equities, with 3%+ losses for the Dow, S&P 500 and Nasdaq. Recession fears are rising as investors watch the yield curve warily, while growth fears hit oil prices too, reversing some of the gains from earlier in the week.
UK, US and Europe: US markets are closed today for the funeral of President George H W Bush, which should result in lower volumes across the board. The pound remains in focus, after the prime minister suffered a series of reverses in Parliament, which may however mean that a no-deal Brexit is much less likely, and a possible ‘Norway option’ becomes a possibility if the current deal fails to pass Parliament.
The contempt vote was another blow to British Prime Minister Theresa May as she battles to gain support for her withdrawal agreement. The vote was won by 311 votes to 293 and saw a substantial drop it the pound which briefly hit its lowest level since April 2017. The vote also saw 26 conservative MP’s vote for their leader to release the full details of the legal advice. The vote was also notably backed by the DUP who have a parliamentary pact with the conservatives, however they have been outspoken with their displeasure with how the withdrawal agreement approaches the Irish boarder issue. Jeremy Corbyn has demanded that the advice is published before the parliamentary vote on the withdrawal agreement next week, so MP’s can make an informed decision. Andrea Leadsom has only indicated that she plans to “respond” today as MP’s meet again as part of the 5-day debate. Speaker of the House John Bercow has stated it would be unimaginable that the advice is not provided before the vote. Continued division between and within the parties suggests the PM may need to increase her efforts if she wishes to get this agreement passed when the MP’s make their decision on it on Tuesday the 11th.
Economic calendar - key events and forecast (times in GMT)
Source: Daily FX Economic Calendar
9.30am – UK services PMI (November): activity expected to increase, with the index rising to 54.1 from 52.2. Markets to watch: FTSE 100/250, GBP crosses 1.15pm – US ADP employment report (November): 189K jobs expected to have been created, from 227K jobs a month ago. Markets to watch: US indices, USD crosses 3pm – Bank of Canada rate decision: no change in policy expected. Market to watch: CAD crosses 3pm – US ISM non-mfg PMI (November): expected to drop to 59.5 from 59.7. Markets to watch: US indices, USD crosses 3.30pm – US EIA crude inventories (w/e 30 November):stockpiles to rise by 2 million barrels, from a 3 million increase a week earlier. Markets to watch: Brent, WTI
Corporate News, Upgrades and Downgrades
Stagecoach suffered a pre-tax loss of £22.6 million, compared to a profit of £96.7 million a year earlier, with a writedown in the value of the US business the main culprit. Adjusted pre-tax profit was down 10% to £87 million.
Wood Group has won a $43 million contract to construct 80 miles of steel pipeline in west Texas.
Patisserie Valerie have appointed an interim finance chief following issues with their accounting reported in October
The Civil Aviation Authority has announced it is taking legal action against RyanAir. The airline are claiming that they do not have to compensate customers for delays during strikes from their staff as they believe this constitutes "extraordinary circumstances". The EU mandate that passengers must be compensated for delays does not apply if the situation is deemed to be extraordinary.
Takeda have gained shareholder approval for their £46 billion takeover of Shire, the largest corporate takeover Japan has ever had
Alpine shareholders have approved their merger with Alps Electric
Aker Solutions upgraded to buy at Kepler Cheuvreux
Bayer upgraded to buy at DZ Bank
HeidelbergCement upgraded to overweight at JPMorgan
Salzgitter upgraded to neutral at Macquarie
Electrolux cut to underweight at Morgan Stanley
Ted Baker downgraded to hold at HSBC
Glaxo downgraded to equal-weight at Barclays
Hargreaves Lansdown cut to underweight at Morgan Stanley
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Information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Theresa May to visit Brussels today to meet with EU leaders. The visit will see May attend ceremonies marking 100 years since the end of the First World War and she will also have a working lunch with French President Emmanuel Macron which is expected to cover the Brexit deal following news of a draft withdrawal agreement this week.
US Fed holds rates as expected with a further hike anticipated in December which saw USD gains and Treasury yields hit highest level since 2008
Chinese President Xi Jinping has sought to reassure companies of the Chinese economy following slowing economic data and trade war speculation as he offered tax breaks and financing help.
Chinese PPI fell 0.3%, in line with expectations whilst CPI remained at 2.5% YoY
Oil continues to trade low following increased OPEC exports, increased US output and exemptions granted to the Iran sanctions. The US now has a higher crude oil output that both Russia and Saudi Arabia
Gold is trading lower following USD gains after the Fed announcement
Disney have announced their Netflix competitor will be called Disney+ and will launch by the end of 2019
Volkswagen have announced they will sell an electric car to rival Tesla at a price of $23,000
Bombadier shares fall 20% following an announcement they will cut 5000 jobs and sell two businesses for $900 million
Asian overnight: A hawkish Fed has sent Asian markets lower, with the Hang Seng leading the losses after falling more than 2%. The US central bank held off for now, yet it is clear that we will see further rates hike in the near future, raising the cost of borrowing from the US. Energy stocks fared particularly bad, as the recent weakness in crude prices took its toll on markets such as the ASX 200 and Hang Seng. Data-wise, all eyes were on the Chinese inflation data, with PPI falling from 3.6% to 3.3%, while CPI remained flat.
DUP leader Arlene Foster is said to be unhappy with the proposed solution regarding the Irish border...
UK, US and Europe: Looking ahead, the UK comes into focus amid the release of Q3 GDP, manufacturing production, industrial production, goods trade balance, and the NIESR GDP estimate. Meanwhile, the US session brings PPI inflation, alongside the Michigan consumer sentiment survey.
Theresa May will visit Brussels today following news that the UK cabinet was invited to review a draft withdrawal deal. The EU had been said to be considering a summit without the inclusion of Theresa May so they could assess the current situation and allow their leaders to put questions forth to their chief negotiator Michel Barnier. DUP leader Arlene Foster is said to be unhappy with the proposed solution regarding the Irish border that is currently speculated to be in the withdrawal agreement. Foster stated a letter she received from May implied a contingency Northern Ireland customs border that May said she would not allow to come into force but the leader of the DUP has said its inclusion raises alarm bells. This visit comes just one day after the UK Brexit secretary Dominic Raab admitted he wasn’t aware of how important the Dover-Calais crossing was to trade for the UK.
Economic calendar - key events and forecast (times in GMT)
Source: Daily FX Economic Calendar
9.30am – UK GDP (September), trade balance (September): GDP to rise 0.5% over the previous three months, from a 0.7% rise in August, and trade deficit to narrow to £1.1 billion. Market to watch: GBP crosses
1.30pm – US PPI (October): forecast to be 0.3% MoM from 0.2%. Market to watch: USD crosses
3pm – US Michigan consumer sentiment (November, preliminary): index to fall to 95 from 98.6. Markets to watch: US indices, USD crosses
Corporate News, Upgrades and Downgrades
The US is suing UBS in relation to defrauding investors in the approach to the 2008 financial crisis
Informa said that revenue rose by almost a third in the first ten months of the year, and it remains on track to meet full-year expectations.
Morgan Advanced Materials said that sales had risen by 7.2% over the ten months to 31 October, and that the outlook for the full year was unchanged.
Grainger has acquired a development in north London for £41 million.
S4 Capital has confirmed it is in discussion with Mightyhive about an acquisition but also talked down speculation saying it is often in discussion with several marketing services about a possible acquisition
KPMG have announced they will no longer offer consultancy work for their audit clients in an attempt to reduce conflicts of interest
AO World will acquire Mobile Phones Direct for £32.5 million
Hochschild Mining upgraded to outperform at RBC
Inchcape upgraded to buy at HSBC
Tele2 upgraded to buy at DNB Markets
Valneva upgraded to hold at Kepler Cheuvreux
BillerudKorsnas downgraded to neutral at Goldman
Smurfit Kappa downgraded to sell at Goldman
Centrale del Latte d’Italia cut to hold at UBI Banca
Legrand downgraded to hold at SocGen
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Information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

USD reaches its highest level this year as it breaches the 97.00 level it tested earlier this year, a level it hasn't seen since June 2017
Asian markets have shown signs of recovery heading towards the end of October which saw significant losses globally. The Shanghai Composite rose just over 1% despite the manufacturing growth rate missing forecasts
The Dow Jones also saw strong gains yesterday following a consumer confidence report which beat expectations, reaching its highest level since 2000. As a result Wall Street is no longer in the negative since the beginning of the year.
US oil inventories to be announced today may see the price fall further. The price is already down over 13% from its peak this year which was at the beginning of this month. Reports suggest the outlook may be bearish as reports suggest stockpiles may be higher than expected and BP have reported their refinery output has increased at the fastest rate for 15 years.
Gold is at its lowest price in over 2 weeks but October is set to be the first month of gains following 6 straight months of losses, the longest streak since 1997.
Facebook beat earnings expectations yesterday with an EPS of $1.76 compared to $1.47 expected, providing relief for the company that has had negative press over the past year .
Samsung saw a 21% increase in operating profit for Q3 YoY, in line with guidance.
Reports of a new Boeing aircraft crash in Indonesia have sparked inquiries into what could cause problems with such a new aircraft. Airlines and their suppliers are likely to be under scrutiny in the coming weeks.
Eurozone YoY CPI is set to be released at 10am and Canadian GDP will be announced at 12:30pm, both could provide volatility with their indices and currency prices.
Asian overnight: An impressive session overnight saw Asian markets follow their US counterparts higher, despite a raft of somewhat disappointing data points from Japan and China. Weaker industrial production, housing starts, and consumer confidence in Japan saw USDJPY push higher over the session. We also saw the BoJ keep rates unchanged, while trimming their inflation forecasts. Meanwhile, the Yuan fell further amid a disappointing set of PMI surveys, with both manufacturing and non-manufacturing expansion slowing down.
USDJPY pushes higher as the BoJ keeps rates unchanged and trims inflation forecasts.
The Australian ASX 200 also saw gains yesterday, led by strong performance in the energy sector specifically. The finance sector also also saw gains of almost 1%. This comes in spite of a 5% reduction in profit from one of the banks (ANZ) that is heavily weighted in this sector which still saw share price increases of 1.05%.
Nickel is down almost 30% from its highest point this year and has returned to the price last seen in December 2017 following the lower than expected Chinese manufacturing data. As with many markets, the commodity will have had sell-side pressure over concerns with the US-China trade war which will have intensified recently with Trump considering further tariffs. The metal has seen increasing demand as it is used in the batteries of electric vehicles which have seen an increase in production. However Tsingshan Holding Group have also announced their intention to implement a more effective supply chain for nickel which will further reduce its price.
UK, US and Europe: Looking ahead, the European session sees markets focus on the latest eurozone inflation data, with both core and headline CPI expected to rise for October. US ADP non-farm payrolls should shift us into a jobs mindset ahead of Friday’s big release, while Canadian GDP and US crude inventories round off a busy afternoon.
Today marks the 10-year anniversary of Bitcoin, the world’s first and most notorious cryptocurrency. As it reaches its milestone for its first decade, the price is set to fall below last years for the first time this year which will only be the second time since its inception that the coin has been worth less on its birthday. It may not be all doom and gloom for the currency though as further financial integration may occur soon as the SEC are reviewing their decision to allow a Bitcoin based ETF. You can read more on the potential effect of this decision on the current price of bitcoin here.
Economic calendar - key events and forecast (times in BST)
Source: Daily FX Economic Calendar
10am – eurozone CPI (October, flash)< unemployment rate (September): CPI to rise 2.1% YoY and core CPI to rise 1.2% YoY from 0.9%. Unemployment rate to hold at 8.1%. Markets to watch: EUR crosses
12.15pm – US ADP employment report (October): 195K jobs expected to have been created, from 230K a month earlier. Markets to watch: US indices, USD crosses
1.45pm – US Chicago PMI (October): index to rise to 60.5 from 60.4. Markets to watch: US indices, USD crosses
3.30pm – US EIA crude inventories (w/e 26 October): stockpiles to rise by 2.5 million barrels, from a 6.3 million barrel increase a week earlier. Markets to watch: Brent, WTI
Corporate News, Upgrades and Downgrades
Next reported a 2% rise in sales in Q2, and it left guidance unchanged for full-price sales growth of 3% over the full year.
Smurfit Kappa reported a 27% rise in EBITDA for the first nine months of the year, while revenue was up 7%. The firm has also acquired a plant and paper mill in Belgrade for €133 million.
Randgold Resources will pay a record full-year dividend of $2.69 per share, up from the original $2.
Pharmaceutical giant GlaxoSmithKline and Tata, the owners of Jaguar Land Rover are set to release earnings
Mike Ashley has bought Evans Cycles which was in administration. The owner of Sports Direct also recently bought House of Fraser which was also in administration.
Santander Q3 profits have increased 36%, making almost €2bn in the 3 months up to September.
Engie upgraded to hold at HSBC
Inchcape raised to overweight at Barclays
Intertek upgraded to buy at Kepler Cheuvreux
Spire Healthcare upgraded to hold at Berenberg
BNP Paribas downgraded to hold at DZ Bank
Fiat Chrysler downgraded to neutral at Mediobanca SpA
Pets at Home downgraded to sell at Goldman
Intu downgraded to reduce at AlphaValue
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Information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Cryptocurrencies have been going through a period of relative stability, which is almost unheard of for the asset class that gained notoriety for its volatile price movements.
...the support and resistance lines are expected to congregate by early November but a breakout can occur at any time...
The stock market selloff that punished the tech sector in the first half of October coincided with Bitcoin losing 7.5% of its value in a single day. Does this correlation in market movements suggest that as Bitcoin and other cryptos have become more mainstream, and adoption by centralised financial institutions has risen, the price is now at the mercy of the same institutions and financial markets it was seeking to circumvent? Or could the selloff be more indicative of general investor sentiment at that time when confidence in the markets was low?
One interpretation of the current market movement suggests that the correlation between the crypto class to the major indices are largely unrelated. This interpretation may be supported by the fact that as the more traditional markets have continued to fall through October (with tech having its worst month in a decade) bitcoin’s price action has remained stable, whilst simultaneously seeing a 17-month low volatility rate, even with yesterday’s 2% fall.
Technical analysis of the price of Bitcoin shows that the coin was hitting its resistance line and the markets were already likely to turn bearish. The below chart illustrates a falling wedge formation with an almost horizontal support of $6000 that has developed since the February market sell off which shows bitcoins price consolidate and volatility reduce. The wedge shows that the support and resistance lines are expected to congregate by early November but it’s important to remember that a breakout can occur at any time as the price boundaries tighten as investors may take any breach of these lines as an indication of the future price of Bitcoin over the medium to long term. The fake-out of Monday the 10th suggests that investors are poised for any news that can drive price action.
Coinciding with this November timeline is a deadline set by the SEC to allow the public to submit opinions on whether to allow Bitcoin ETF’s in the United States. The deadline, which has been moved from October 26th to November 5th follows the SEC’s original decision to reject the ETF’s citing a lack of compliance to prevent market manipulation.
...impending large technical and fundamental focal points implies we may be on the brink of a spike in volatility...
This decision by the securities authority could fundamentally define how investors perceive the currency as a further integration into financial markets is either halted again or finally given the green light. The ability for this type of announcement to move prices should not be underestimated as bitcoin hit its all-time high just six days after the first Bitcoin futures contract was announced by the CBOE. Granted this happened during an upwards trending bull market, but it undeniably added to that movement.
The announcement to review the initial decision just one day after rejecting the first application, as well as a published statement of official dissent by commissioner Pierce of the SEC, could indicate a potential swing in judgement from the SEC. However, this may not represent a full shift of opinion by the commission as it only takes one commissioner to open a review. Following the deadline, an official decision will not come from the SEC until they have had a chance to review the public submissions, but investors will be listening intently for any early indication of how the decision might go.
More recently, reports that some of the concerns that the SEC have over introducing the ETF have been mitigated by the organisations producing the ETF’s have saw speculators expectations heighten for a prospect that at one point seemed rather unlikely. The concerns of the SEC include market liquidity, volatility, pricing and market manipulation. However, proponents have argued that the SEC’s demand for a ‘significant’ futures market allowed them to be non-committal as they have not defined what they classify as significant.
The imminence of impending large technical and fundamental focal points implies we may be on the brink of a spike in volatility but what price can investors reasonably expect the currency to move to if the market were to shift? The previous decision by the SEC preceded a $400 dip in the price of the coin in one day and fell back down almost $2000 in the following two weeks to the previously mentioned support level of $6000. Speculators may be hoping a reversal in the decision could see Bitcoin return to $8000 or higher. It’s hard to predict how low the price could go as these prices haven’t been seen since before the all-time high but proponents of the technology wishing for continued stability will be hoping that the lack of a bitcoin ETF is already priced into the market.

Chinese stock have rallied with the Shanghai Composite Index gaining more than 4% as officials attempt to support the market as GDP figures last week fell short of the 6.6% growth target by 0.1%
The rest of the APAC region followed suit with all major indices apart from Australia's ASX 200 making gains.
Dominic Raab has stated there may be some flexibility on the Irish border issue. The Brexit Secretary made the comment in an interview which may allow negotiations continue for a soft Brexit.
Uncertainty over oil remains as the investigation over the Saudi journalist Jamal Khashoggi continues. Turkey have stated they will announce their findings tomorrow which could cause further volatility with oil if the announcements result in further international condemnation for Saudi Arabia.
Italian bond yields have lowered as ratings agency Moody's has kept their outlook 'Stable'
RyanAir profits fall 7% as their Chief Exec blames air traffic control disruptions.
Asian overnight: This rally is likely to calm investor fears that China was heading towards an economic disaster with stock-backed loans as China’s Shanghai index was down 30% this year. Chinese markets have drawn attention recently with missed GDP estimates and the ever-present trade war uncertainty. Confidence is also weak in the yuan as it looms ever closer to the $7 level. Major concerns are beginning to emerge that this fall in Chinese share prices is causing a further sell off due to stock-backed loans. Many Chinese corporations have these loans secured on their shares which they must liquidate as part of the agreement to ensure they can fulfill their obligations. Following the major market sell off seen earlier this month which mainly hit tech, an important sector for China, it’s likely that further market drops could cause more firms to have to sell their shares which would cause their price to drop further. This recent rally is likely to placate investors temporarily but as 11% of the country’s market capitalisation is being held as collateral for loans investors will still fear that another market downturn could cause a landslide for Chinese share prices.
...11% of the country’s market capitalisation is being held as collateral...
UK, US and Europe: The comment from Secretary Raab comes just a day after London saw a protest of approximately 700,000 people who were voicing their concerns over the final deal that the UK will ultimately make with the EU. Markets are likely to react positively to any news that furthers the negotiations between the UK and Brussels as it potentially avoids the possibility of a hard Brexit.
The west has remained sceptical as Saudia Arabia have changed their story regarding the reported death of journalist Jamal Khashoggi. As a growing number of leaders from some of the worlds largest corporations are pulling out of the investment conference 'Davos in the Desert', Saudia Arabia appear to be in damage control mode. The investment conference is an important part of the Saudi Prince Bin Salman's vision for the future of Saudi Arabia in which they intend to reduce their economic dependence on oil. The conference was set to garner investment support to develop other areas of the economy, something the Gulf state also intends to finance through the IPO of the state owned oil corporation Saudi Aramco.
South Africa: The dollar has softened to assist gains in commodity prices which has an effect on the South African bourse. The rand is firmer this morning as well. Tencent Holdings is trading 2.91% higher in Asia, suggestive of a positive start for major holding company Naspers. BHP Billiton is up 0.2% in Australia, suggestive of a flat to marginally higher start for local resource counters. Today's economic calendar is light with no high impact data scheduled for today.
Economic calendar - key events and forecast (times in BST)
Source: Daily FX Economic Calendar
1.30pm – US Chicago Fed index (September): expected to fall to 0.15 from 0.18. Markets to watch: US indices, USD crosses
Corporate News, Upgrades and Downgrades
NMC Health has upgraded its annual revenue and earnings guidance. A stronger second half means that revenue is expected to rise 24%, from a previous 22% guidance, and EBITDA will now be $480 million instead of $465 million.
Ryanair has suffered a 9% fall in pre-tax profit for the first half, while average fares were down 3%. Ryanair will close or downsize three bases and shrink its winter capacity, and it does not rule out further capacity cuts.
Fiat Chrysler are set to announce the sale of their component maker to rival Calsonic Kansei for $7.1 billion
Debenhams has announced it will continue with its store closures as well as unveiling a £100m savings plan
Bankia upgraded to neutral at BPI
Hunting upgraded to outperform at Macquarie
Ophir Energy upgraded to buy at Jefferies
Tullow upgraded to buy at Jefferies
Cairn Energy cut to underperform at Jefferies
Intu downgraded to hold at Berenberg
Novartis downgraded to hold at Baader Helvea
Publicis downgraded to hold at Liberum
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US sees largest market fall in 8 months with the Dow Jones losing over 800 points in the main session.
Asian markets followed suit with both Tokyo and Hong Kong down over 3%. The Taiwanese index was down 6% with the MSCI Asia Pacific average coming in at an average loss of 3.5% for the region
The tech sector saw the biggest losses yesterday with FANG companies losing between 4-9%
Oil saw its biggest 2 day loss since July as supply concerns continue. The US are set to announce their inventory levels later today
Hurricane Michael has continued to batter the South-East coast of the country and is reportedly the largest hurricane to hit the area since 1992 but has now been downgraded to a tropical storm
The Cryptocurrency market lost over $12 billion of market value after a period of relatively low volatility, something the asset class isn’t particularly known for. Bitcoin now stands 68% lower that it’s all time high. This comes amidst reports that theft of the digital currency has hit 1 billion in the last 9 months.
Going into Thursday, volatility may continue with US CPI numbers being released. Bulls will be hoping to beat forecasts of 2.4% to help recover yesterday’s movements. Gold is likely move if there is a divergence from forecasts. The VIX pushed past 20 after yesterdays volatility.
The dollar declined against all G-10 peers following the sell-off.
Asian overnight: Chinese espionage tensions continue as the US accuses a Chinese operative of spying on US aerospace companies. Meanwhile, Trump has also lashed out at South Korea for not paying for the deployment of a missile defense system on the peninsula.
The effects of the trade war are creating some interesting trade options, especially in the EM arena where price action is dictated by USD and CNH price action, industrial manufacturing and economic growth, and export deficits throughout the East. Notably the 25% tariffs imposed on the US has caused the price of Soyabeans (used for oils and meal) to skyrocket in Brazil, pushing suppliers to offload significant quantities of reserves pushing stockpiles dangerously low. Going forwards we could see buy side pressure from Brazil taking up the surplus now seen in the US. You can trade USDCNH, Soyabeans, EM currencies such as the Brazilian real, EM ETF’s and diversified trackers (linked to manufacturing, industrial production or soft commodities) all through IG.
The fall in US Treasuries is particularly concerning to investors as bonds are seen as a safe haven during turbulent equity market movements.
UK, US and Europe: The markets began their large decline around 12pm BST yesterday showing investors bearish attitude as the Dow remains near its all time high. Mortgage application rates falling for the second week in a row following the Feds interest rate hike gave the bears the ammunition then needed to begin the sell off. However mortgage providers fared fairly well compared to other sectors in the US. Tech took the brunt of the hit with some shares losing up to 10% , possibly suggesting that the trade war is likely to hit tech. Going into Thursday, the futures market implies the bearish attitude is likely to continue. Donald Trump has also blamed the fed interest rate for yesterday’s sharp fall. When asked if it could have been due to trade war tensions he stated there was no reason to raise interest rates and that the fed were acting ‘loco’.
US Treasuries also saw a fall yesterday as investors began to sell causing yields to rise which can further influence consumer interest rates. This is particularly concerning to investors as bonds are seen as a safe haven during turbulent equity market movements.
South Africa: Gold has struggled to find safe haven demand in the current equity market selloff and trades marginally lower this morning. Brent crude is under pressure despite hurricane Michael threatening the Gulf of Mexico and shutting down a lot of production within the area. Tencent Holdings is down 7% in Asia suggestive of substantial weakness to follow for major holding company Naspers (which has a 20% weighting in the Jse Top40 Index). BHP Billiton is down 3.8% in Australia suggesting a soft start for local resource counters.
Economic calendar - key events and forecast (times in BST)
Source: Daily FX Economic Calendar
1.30pm – US CPI (September): prices forecast to grow 2.8% YoY and 0.2% MoM, from 2.7% and 0.2% respectively. Core CPI to be 2.3% YoY from 2.2% and 0.2% from 0.1% MoM. Market to watch: USD crosses 4pm – US EIA crude oil inventories (w/e 5 October): stockpiles to fall to 5.08 million barrels. Markets to watch: Brent, WTI
Corporate News, Upgrades and Downgrades
WH Smith saw an overall rise of 2% in revenue for the year, to £1.26 billion, although the like-for-like figure was flat. Group profit from trading operations was up 3% to £163 million. The group has announced a restructuring of its high street division, closing some initiatives and shutting around six stores.
Johnson Press is putting itself up for sale, following a strategic review of the business.
Hargreaves Lansdown reported a 3% in assets for Q1, to £94.1 billion. 29,000 net new clients were added during the period.
Jupiter reported a drop in assets under management to £47.7 billion for Q3, from £48.2 billion in the previous quarter. The fixed income division saw the bulk of the outflows.
Tesla are looking to appoint a new chairman following controversy with Elon Musk and the SEC.
Natixis confirms it is examining deal with French payment processing company Ingenico
TechnipFMC Upgraded to Buy at SocGen
Norsk Hydro Upgraded to Buy at Arctic Securities
ElringKlinger Upgraded to Hold at DZ Bank
Ferrari Downgraded to Hold at Jefferies
Capgemini Downgraded to Neutral at Oddo BHF
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Information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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